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I am currently working a Firm-Fixed Price Service contract under FAR Part 15.  This contract has cost-reimbursable CLINs for travel on it.  I have a contractor who is proposing labor hours for the time they would spend on an airplane travelling to the work site.  I am under the impression that payment for such labor hours are not allowable.  However, I cannot find anything in black-and-white that says for sure whether that is correct.  Has anyone dealt with this situation before?  If so, could you point me to where in the FAR I would find that information?

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1 hour ago, BGBeaver said:

I have a contractor who is proposing labor hours for the time they would spend on an airplane travelling to the work site.  I am under the impression that payment for such labor hours are not allowable.  However, I cannot find anything in black-and-white that says for sure whether that is correct.

If I understand you correctly, the contractor wants to be paid for the hours that its employees would spend traveling from one place to another.

I do not know of any rule in FAR that prohibits paying the contractor for travel hours. I believe that the matter is negotiable.

That's not to say that it would be good business to agree to such a deal. You should ask some questions, look at some cost data, and decide what would be fair and reasonable.

 

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16 hours ago, BGBeaver said:

This contract has cost-reimbursable CLINs for travel on it. 

More detail is needed.   By example....

What does the actual contract say, what are the services, etc?

And then there are those rules that apply outside the contract so to speak.   The contractor may have a legit cost under FLSA for certain employees when the contractor has to pay for travel time.   https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs22.pdf

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1 hour ago, C Culham said:

More detail is needed.   By example....

What does the actual contract say, what are the services, etc?

And then there are those rules that apply outside the contract so to speak.   The contractor may have a legit cost under FLSA for certain employees when the contractor has to pay for travel time.   https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs22.pdf

The contract is for simulator training events.  There is nothing in the contract that states that labor hours would be paid for travel.  I will take a look at that FLSA link.  Under FLSA, would the contractor be paid just for hours of travel if that travel time is less than a typical work day?

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13 minutes ago, BGBeaver said:

Yes, mostly

So much I don't know here! But ...

Contractor employees (typically) fill out time cards recording their hours worked during the day and week. They must account for all work hours, accurately, under penalty of law for any intentional misstatements.

If you don't want them to record their hours to your contract when they travel on behalf of your contract, then where would you have those hours go? Overhead? If they go to overhead, then all customers pay for your travel hours.

That's not to say that you need to pay for those hours. As Vern said, that's negotiable. But if the hours are charged to the contract and are not billable under contract terms (e.g., Section H clause), then you are in actuality taking profit away from the contractor, because the contractor has costs that it cannot bill.

Is that situation fair and/or reasonable?

You can make the contractor whole by agreeing to a higher fixed fee (to cover those non-reimbursable costs). That could be an option. Or you can sigh and agree that when the contractor employees travel to benefit the contract, then the contract should pay for their time.

Just some things to consider.

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2 minutes ago, here_2_help said:

So much I don't know here! But ...

Contractor employees (typically) fill out time cards recording their hours worked during the day and week. They must account for all work hours, accurately, under penalty of law for any intentional misstatements.

If you don't want them to record their hours to your contract when they travel on behalf of your contract, then where would you have those hours go? Overhead? If they go to overhead, then all customers pay for your travel hours.

That's not to say that you need to pay for those hours. As Vern said, that's negotiable. But if the hours are charged to the contract and are not billable under contract terms (e.g., Section H clause), then you are in actuality taking profit away from the contractor, because the contractor has costs that it cannot bill.

Is that situation fair and/or reasonable?

You can make the contractor whole by agreeing to a higher fixed fee (to cover those non-reimbursable costs). That could be an option. Or you can sigh and agree that when the contractor employees travel to benefit the contract, then the contract should pay for their time.

Just some things to consider.

Yes, sorry, I wish I could say more but the whole matter of travel is a new thing to me.  We have a pricing matrix on this contract that provides prices by training event.  This matter was brought up through an Unsolicited Proposal for some much-needed training that is specific from what is already on contract.  The contractor is using that as a reason for the increased labor rate, which is not too much of an issue.  The hours of actual work proposed is technically acceptable but I was able to determine they added extra labor hours to be paid in addition to the cost-reimbursable travel.

Even if I can't make the argument that payment for those additional labor hours are not allowable, I still have a hard time understanding if it is fair and reasonable for me to pay for a full work day or more for CONUS and OCONUS Travel respectively.

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15 minutes ago, BGBeaver said:

Under FLSA, would the contractor be paid just for hours of travel if that travel time is less than a typical work day?

My point was not that FLSA requires the government to pay the contractor, the contract dictates (or not in your situation) what the contractor will be reimbursed under the travel CLIN..   My point was that if the matter becomes one of negotiation, as has been suggested in this thread, the contractor may have a cost of paying employees for travel if FLSA applies.

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30 minutes ago, BGBeaver said:

Even if I can't make the argument that payment for those additional labor hours are not allowable, I still have a hard time understanding if it is fair and reasonable for me to pay for a full work day or more for CONUS and OCONUS Travel respectively.

I hear you!

All I can say is that when employees deploy to Forward Operating Bases (FOBs) under LOGCAP or similar contracts, the contract pays for their travel time from home to the FOB. Sometimes that may involve multiple days of travel, depending on where the FOB is located and when the convoy is scheduled. Depending on contract terms and the employee's status under FLSA, that also may involve paying overtime.

So -- again, for whatever it's worth to set your mind at ease -- there is definitely lots of precedent for the government paying travel labor hours.

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2 hours ago, BGBeaver said:

Even if I can't make the argument that payment for those additional labor hours are not allowable, I still have a hard time understanding if it is fair and reasonable for me to pay for a full work day or more for CONUS and OCONUS Travel respectively.

Lesson to be learned: Contractual requirements for travel and contractor compensation for travel are two of the issues that should be discussed and resolved during contract formation. 

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If you would pay a contractor to attend a conference at the government's behest from which they take no useful information away because it was terribly organized and poorly planned (that never happens, right?), how could you justify not paying them to sit on an airplane to go to said conference?  Neither activity provided 'value' and they were only there because you told them to go.

I once worked on the Antarctic support contract for NSF, which involved almost a full week of travel time to the ice depending on the itinerary (via Chile or New Zealand).  Would you expect a contractor to travel gratis for days on end with no labor hours charged?  (NSF also paid T&M for medical exams, psych evals,  and immunizations.)

Methinks the time spent negotiating something like this would cost more than any savings potential.  The key is not sending contractors on non-value added travel in the first place.  My only negotiation stipulation would be that no overtime is authorized for travel.

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Quote

Did you get to go to the ice?

No I did not - 'twas but a lowly consultant.  I did review and recommend travel and other invoiced costs for payment.  Invoices ran about $15M per month during the science season.  We once paid a guy from Wells Fargo over $15K to service the McMurdo station's 2 ATMs.

Most interesting contracting story was during our yearly award fee board meeting when we were discussing how to properly account for an incident whereby the contractor winter-over crew lost their minds a little bit and started fighting and breaking stuff.  The station manager had to be deputized as a US Marshal via Skype in order to confine one of the troublemakers.  The program office was all impressed how the contractor "took full responsibility and paid all expenses associated with the 109th New York ANG flying in a C-130 in the dead of winter to get their people out".  That was when I pointed out that the contract said that any contractor-caused damage to government property greater than $250K would result in zero fee, so them paying >$100k for the airlift was actually so that their MUCH greater award fee would not be in jeopardy. Mic drop moment.

Scientists in Antarctica Drink a Lot. Maybe Too Much | WIRED

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Having both FFP and LH CLINs on the same contract is legal, but it is problematic.  If done, it should be done carefully and with some pre-thinking to pre-address questions of this sort.  

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55 minutes ago, ji20874 said:

Having both FFP and LH CLINs on the same contract is legal, but it is problematic.  If done, it should be done carefully and with some pre-thinking to pre-address questions of this sort.  

Same problem with almost any mix of contract pricing arrangements, e.g., FFP and cost-reimbursement. The CO should require cost segregation by line item.

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